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Swiss government defends central bank against currency complaints

Tuesday, June 9, 2015 - 06:38

The Swiss government defended the central bank on Monday against growing complaints from politicians and the public that it has done too little to shield the economy from a surge in the value of the franc currency.

PHOTO: BLOOMBERG

[ZURICH] The Swiss government defended the central bank on Monday against growing complaints from politicians and the public that it has done too little to shield the economy from a surge in the value of the franc currency.

Since the central bank gave up trying to cap the franc in January, the cost of Swiss exports in major makets such as the euro zone has jumped, undermining sales and prompting Swiss firms to cut hundreds of jobs.

But Economy Minister Johann Schneider-Ammann said on Monday that the Swiss National Bank's (SNB) autonomy in setting monetary policy is "beyond all question" and the government will not interfere.

Schneider-Ammann was responding to left-wing lawmaker Susanne Leutenegger Oberholzer who asked in parliament what the government was telling the SNB to do to safeguard the economy. "I have to disappoint you when I say that yes, we have intense debates (with the SNB), but we do not conduct these debates in public and I respect the independence of the SNB, which is beyond all question," Economy Minister Johann Schneider-Ammann said.

He later said the SNB was acting to the best of its knowledge while considering Switzerland's economic interests.

The SNB, which holds its next policy session on June 18, cut its growth forecast three months ago to just shy of 1 per cent from 2 per cent previously. Since then, data has shown that Switzerland's economy shrank in the first quarter and some economists expect overall contraction this year.

With three members, the SNB's board is far smaller than those of the European Central Bank, the United States' Federal Open Market Committee (FOMC) and the Bank of England. The SNB does not publish minutes on its policy decisions.

The Swiss government learned of the SNB's decision to stop defending the franc cap roughly 30 minutes before it was publicly announced. It has since sought closer liaison with the central bank.